Understanding the Importance of the Tax Return After Death

Published on February 1, 2020

  • Funeral complex

Following the death of a loved one, the liquidator of the estate will have numerous responsibilities, including filing the deceased's final tax return. This return must be made for the last year(s) of the person’s life. For example, if the person lived a few days in 2019, a tax return must be filed for 2018 and another return for 2019 at the same time. In addition, if the person failed to file other tax returns, the liquidator will have to prepare them as well. Find out what the after-death tax return consists of and why it is important to file it.

Know the deadlines
The first thing you need to know is the deadlines. If the death occurred between January 1 and October 31, the deadline for filing the deceased's tax return is the standard date of April 30 of the following year. If the death occurred between November 1 and December 31, the deadline for filing the tax return is 6 months after the date of death. Knowing this information can relieve you of some stress, as it gives you more time to get all the documents together if you are facing the second situation.

Get all the essential documents together
Before filing the deceased's tax return, make sure you have all the necessary documents on hand. You will first need a copy of the death certificate, the deceased's social insurance number and a copy of the document proving that you are the liquidator. You will also need to know all sources of the deceased's income up to the date of death. To do so, contact former employers, financial institutions, trust companies, pension plan administrators, etc. This will help you optimize your time as the deadline for filing the tax return approaches.

Don't hesitate to call on a qualified professional
If you have been appointed liquidator, you will have many tasks to carry out to settle the estate. It may therefore be a good idea to ask an accountant to guide you in completing the tax return, while helping you to avoid making mistakes. Or you can refer to the Canada Revenue Agency's guide to filing the tax return yourself.

Why is it important to file a final tax return?
Aside from having to pay penalties, it is essential to file the deceased's tax return to ensure that you pay all taxes owing and avoid paying late payment penalties. This is because income tax must be paid by the estate as well as taxes on the deceased's property (in certain situations). It is also important to know that taxes associated with normal income must be paid before the heirs can receive their inheritance. Once the taxes are paid, the estate can be considered settled.

Filing a final tax return is not to be taken lightly, which is why it is important to meet the statutory deadlines. This will save you from a lot of complications, while considerably reducing your stress. Consult the Useful links section of the Aeterna Complex's website for a list of the various organizations recognized for estate settlement. Our staff will also be able to guide and advise you so that you can mourn your loved one with full peace of mind.

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